CONSUMERIST: Senator Calls For Investigation Into Three For-Profit College Chains, Restrictions On Future Campus Sales

Career College Central Summary:

  • The struggle to protect students from potentially harmful for-profit college chains continued today as Illinois Senator Dick Durbin urged the Department of Education to investigate the business practices of three of the country’s largest propriety education companies – ITT Educational Services, Career Education Corporation, and Education Management Corporation.
  • In a letter [PDF] to Education Secretary Arne Duncan, Durbin pushed the Dept. to increase its oversight of the companies, hold them accountable for their actions and put restrictions on any campus sales in order to protect students and taxpayers.
  • The companies are three of the largest for-profit players in the country; ITT Education Services owns the ITT Technical chain, EDMC operates a number of small colleges including The Arts Institutes and Argosy schools and CEC owns several career colleges and universities including Colorado Technical and American InterContinental.
  • Durbin asks the Secretary Duncan to provide information related to any steps the Dept. has taken to address allegations that the three schools have engaged in harmful practices such as inflating job placement rates, perpetrating deceptive recruitment tactics, pushing students into high-cost private loans and failure to provide required financial documents to regulators.
  • ITT Educational Services was recently charged with fraud by the Securities and Exchange Commission.
  • CEC has faced a number of lawsuits and investigations stemming from accusations it inflated job placement rates for its graduates.
  • Likewise, EDMC – which is partially owned by Goldman Sachs – has faced its share of issues in recent years, from falling enrollments and financial difficulties and increased scrutiny from state and federal regulators.
  • Back in 2011, the company was sued by the U.S. Department of Justice and four states. That lawsuit accused the company of violating a federal law against paying recruiters based on the number of students they manage to enroll.
  • “For each of these companies, what steps has the Department taken to ensure that current and prospective students are informed of ongoing investigations and lawsuits?” the letter asks.

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